A construction contract is a mutual or legally binding agreement between two parties based on policies and conditions recorded in document form. The two parties involved are one or more owners, and one or more contractors. The owner has full authority to decide what type of contract should be used for a specific development to be constructed and to set forth the legally-binding terms and conditions in a contractual agreement.
Video Construction contract
Types
The six types of contracts are:
- Lump sum contract
- Item rate contract/schedule contract
- Lump sum and scheduled contract
- Cost plus fixed fee contract
- Cost plus percentage of cost contract
- Special contracts
Lump sum contract
In a lump sum contract an owner agrees to pay a contractor a specified lump sum after the completion of work without a cost breakdown. After work no detailed measurements is required.
Lump sum and scheduled contract
This is a lump sum contract that requires a cost breakdown.
Cost plus fixed fee contract
In cost plus fixed fee, the owner pays the contractor an agreed amount over and above the documented cost of work.
Cost plus percentage of cost contract
In cost plus percentage, the owner pays greater than 100 percent of the documented cost, usually requiring detailed expense accounting.
Special contracts
Special contracts are further classified into five types:
- Turn key contract
- Negotiated contract
- Package contract
- Continuing contract
- Running contract
Maps Construction contract
See also
- Economics
- Engineering, procurement and construction
References
Source of the article : Wikipedia
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